Recent years have witnessed intense interest in microRNAs (miRNAs), an extensive class of small regulatory RNAs that derive from distinctive hairpin precursor transcripts. In the course of analyzing the miRNA pathway in Drosophila, we uncovered novel small RNA genes derived from short introns that we term miRtrons. Although these share certain features with miRNA genes, miRtron biogenesis deviates fundamentally from that of miRNAs. Specifically, our work indicates that miRtrons derive from hairpins whose ends are defined by splicing, rather than by RNAse III cleavage. Structural considerations suggest that miRtrons transit the Dicer pathway and are transferred into active effector complexes. We have generated experimental and computational evidence that miRtrons are indeed functional inhibitory RNAs that can operate through perfect, siRNA-type targets as well as imperfect, miRNA-type targets. The very existence of miRtrons indicates that we do not fully understand the range of cellular substrates available to Dicer. This fact is made further evident by our cloning and functional verification of atypical miRNA and miRtron genes with unorthodox structures. Therefore, our completed studies open a door onto previously unrecognized substrates for known small RNA pathways. In this application, we propose to use our proven experimental and computational expertise to analyze the miRtron pathway. Our major goals are to elucidate the biochemistry of miRtron biogenesis, to analyze the effect that miRtrons have on gene regulatory networks, to assess the breadth of RNAs that can be processed by the miRtron and microRNA pathways, and to test whether miRtrons exist in other species. Taken together, these studies will not only provide pioneer knowledge of a novel pathway that produces small regulatory RNAs in Drosophila, but will broaden our appreciation of RNA substrates that are available to animal Dicer pathways. microRNAs are small, ~22 nucleotide regulatory RNAs that control the activity of messenger RNAs, which are the templates for protein synthesis. In fact, microRNAs constitute one of the largest gene families in existence, and mediate a network of regulatory interactions that appears to involve a majority of messenger RNAs encoded by the genome. Because so many genes are influenced by microRNAs, the potential for microRNA dysfunction to underlie disease is enormous. At the same time, the potential benefit of exploiting the microRNA pathway and related regulatory RNA pathways as research tools and therapeutic strategies is similarly vast. These considerations emphasize the importance of continued basic research into the nature and the functions of small RNA pathways. In this proposal, we describe a novel Drosophila pathway that intersects with the microRNA pathway, thereby producing a previously uncharacterized class of regulatory RNAs. Since these new RNAs derive directly from the splicing of short introns, we have termed these miRtrons. In our proposal, we describe studies of miRtrons that take advantage of our proven expertise in the experimental and computational analysis of microRNA genes. These studies will elucidate the biochemical pathway for miRtron biogenesis, demonstrate the effect that miRtrons have on gene regulatory networks, assess the breadth of RNAs that can be processed by the miRtron and microRNA pathways, and test whether miRtrons exist in other species.